The Daily Start-Up: Highland Capital Cuts Fund Size In Half

This morning’s roundup of the latest venture capital news and analysis across the Web:

Art by Mike Lucas

Sawing A Fund In Half - Greylock Partners had no trouble rounding up money, raising a $575 million fund in just four weeks or so. Accel Partners gathered $1 billion for two funds in less than two months. But another well-known firm, Highland Capital, took a little more time to raise a fund that is half the size of its predecessor. Highland today announced a $400 million fund it began marketing in the spring. The smaller fund size, Highland says, is by design, not due to a lack of LP demand. “I think we have to be more careful about the amount of dollars needed in companies,” General Partner Bob Higgins told VentureWire. Read that story here.

Niche Players – The Wall Street Journal points out three venture capital firms that changed the way they do business to stave off a shutdown. What do these firms have in common? They’re all small, niche firms that need to distinguish themselves. Don’t expect any bigger firms to adopt these strategies anytime soon. But what these little guys are trying to accomplish is interesting.

Virtual Reality – If you’re starting up a new company, forget the office early on – stay virtual, says serial entrepreneur David Cancel. “At the beginning, use the cash you’d be spending on rent to invest in things that grow your business,” Cancel writes.

Tinker Toys - Behold the second Industrial Revolution. The American tradition of “tinkering” – essentially inventing things with your hands – is back, declares WSJ, thanks to the economic crisis and falling prices of high-tech tools and materials. Here’s an interesting stat: According to the American Association of Engineering Societies, there were 27% more undergraduates who earned mechanical-engineering degrees in 2008 than in 2003, while the number of computer-engineering graduates fell 31% during that time. As Thomas Friedman wrote in The New York Times, “We need to get back to making stuff, based on real engineering not just financial engineering.”

No Silicon Rally – We keep hearing about a recovery in Silicon Valley, but employment at technology companies is stuck in a slump, according to WSJ. Internet jobs are on the way up, but employment in computer and electronics product manufacturing has fallen hard.

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Produced by the editors of Dow Jones VentureWire, Venture Capital Dispatch tracks the fast-moving developments at the intersection of high-tech innovation and venture capital finance. Featuring the VentureWire reporting team in the Silicon Valley, New York, Boston and Shanghai tech centers, Venture Capital Dispatch provides insight into the newest start-ups and latest trends in venture capital investing. Write us at VCdispatch@dowjones.com. For more information on Dow Jones products covering venture capital and other financial markets, go to http://pevc.dowjones.com.